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Next stop for Neoplan: bankruptcy court

Chapter 11 filed 4 months after Lamar bus plant closes

Janet Forgrieve, Rocky Mountain News

Published August 19, 2006 at midnight

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A Lamar bus maker filed for bankruptcy protection Thursday, just months after closing its factory.

Neoplan USA Corp., which made heavy-duty buses for municipal transit systems, filed for Chapter 11 bankruptcy reorganization in Delaware.

Last November, the company said it would cut more than 300 jobs in Lamar and shutter the factory. It sold the last bus produced there in April and closed shortly thereafter, said spokesman Bob Keyser.

A Denver headquarters still employs 11 people but likely will close once the bankruptcy reorganization is complete.

"The company has a very high debt load, and without manufacturing operations this debt cannot be serviced," said Neoplan President Harold Boade in a statement.

Parent company IAP Acquisition Corp. will seek a sale in bankruptcy court of its profitable division, a Pennsylvania-based bus-parts supplier called Neopart, said Neoplan's Denver attorney, Karl Eklund.

Neoplan USA was owned by German manufacturer Neoplan from the time it began operations in Colorado in 1981 until 1998, when it was spun off into a separate company that continued to use the name under a licensing agreement.

The Lamar factory turned out 300 to 400 buses a year at its peak, but the number began dropping below 200 several years ago, according to bankruptcy court documents. This year, the plant built and sold only 11 buses. The company estimates that about 2,700 of its buses are still on the road.

Industry practices contributed to Neoplan's financial woes, Eklund said.

When municipalities are looking to buy new buses, they're very specific about what parts they want used, he said. Because of that, parts suppliers know that the company that wins the contract will buy the parts specified, and there's no incentive to offer discounts.

Additionally, he said, in recent years, startup manufacturers with little to no debt have been able to outbid older players such as Neoplan and win a bigger share of the business.

Bankruptcy court documents show Neoplan claims between $10 million and $50 million in assets and $50 million to $100 million in debt, citing between 1,000 and 5,000 creditors.

The largest debt listed is an almost $18 million loan with the Bank of New York.

Preliminary hearings will begin in Federal Bankruptcy Court in Delaware on Tuesday.

Once the reorganization is complete, the Denver office will likely close, Eklund said.

"Hopefully it's all going to go very quickly," he said.

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